Neuraxis(NRXS) - 2025 Q1 - Quarterly Report

PART I ITEM 1. FINANCIAL STATEMENTS NeurAxis, Inc.'s unaudited condensed financial statements for Q1 2025 are presented, detailing balance sheets, operations, equity, cash flows, and notes Condensed Balance Sheets Total assets and stockholders' equity decreased from December 31, 2024, to March 31, 2025, due to reduced cash and increased accumulated deficit | Metric | March 31, 2025 (Unaudited) | December 31, 2024 | | :-------------------------------- | :--------------------------- | :------------------ | | Cash and cash equivalents | $2,005,370 | $3,696,870 | | Total current assets | $2,541,026 | $4,266,183 | | Total Assets | $3,029,809 | $4,757,572 | | Total current liabilities | $2,101,203 | $2,433,325 | | Total liabilities | $2,771,330 | $2,689,824 | | Total stockholders' equity | $258,479 | $2,067,748 | | Accumulated deficit | $(59,078,296) | $(56,799,612) | Condensed Statements of Operations Q1 2025 net sales and gross profit increased, but operating and net losses rose due to higher general and administrative, and R&D expenses | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------------------ | :-------------------------------- | :-------------------------------- | | Net Sales | $895,655 | $646,635 | | Cost of Goods Sold | $139,475 | $75,081 | | Gross Profit | $756,180 | $571,554 | | Selling Expenses | $133,954 | $80,030 | | Research and Development | $60,556 | $5,570 | | General and Administrative | $2,856,768 | $2,318,074 | | Operating Loss | $(2,295,098) | $(1,832,120) | | Total other income (expense), net | $16,414 | $(288,531) | | Net loss | $(2,278,684) | $(2,120,651) | | Preferred stock dividends | $(213,543) | — | | Net loss available to common stockholders | $(2,492,227) | $(2,120,651) | | Basic and diluted loss per share | $(0.33) | $(0.32) | Condensed Statements of Stockholders' Equity (Deficit) Total stockholders' equity significantly decreased from $2,067,748 to $258,479 in Q1 2025, due to net loss and restricted stock awards | Metric | Balances at January 1, 2025 | Balances at March 31, 2025 | | :----------------------------------- | :-------------------------- | :------------------------- | | Convertible Series B Preferred Stock | $4,281 | $4,281 | | Common Stock | $6,990 | $7,216 | | Additional Paid In Capital | $58,856,089 | $59,325,278 | | Accumulated Deficit | $(56,799,612) | $(59,078,296) | | Total Stockholder's Equity | $2,067,748 | $258,479 | - Issuance of restricted stock awards contributed $356,922 to additional paid-in capital during the three months ended March 31, 2025[11] Condensed Statements of Cash Flows Net cash and cash equivalents decreased in Q1 2025, driven by increased cash used in operations and significantly reduced cash from financing activities | Cash Flow Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :---------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash used in operating activities | $(1,603,655) | $(1,332,160) | | Net cash used in investing activities | $(18,000) | $(14,722) | | Net cash (used in) provided by financing activities | $(69,845) | $1,350,074 | | Net (Decrease) Increase in Cash and Cash Equivalents | $(1,691,500) | $3,192 | | Cash and Cash Equivalents at End of Period | $2,005,370 | $81,752 | - The decrease in financing activities cash flow is primarily due to the absence of convertible note issuances in 2025 that occurred in 2024[140] Notes to Condensed Financial Statements These notes provide essential context for the condensed financial statements, detailing operations, accounting policies, related party transactions, debt, equity, commitments, and litigation 1. Basis of Presentation, Organization and Other Matters NeurAxis, Inc. specializes in medical neuromodulation devices, with four FDA-cleared products, and financial statements prepared under U.S. GAAP for interim reporting - NeurAxis, Inc. develops, produces, and sells medical neuromodulation devices[14] - Key FDA-cleared products include IB-STIM (for functional abdominal pain in ages 8-21), Rectal Expulsion Device (RED) (for adult chronic constipation), and NSS-2 Bridge (licensed to Masimo Corporation for opioid withdrawal symptoms)[14][16] 2. Summary of Significant Accounting Policies This note outlines critical accounting policies and estimates, including revenue recognition, fair value measurements, stock-based compensation, and the company's going concern assessment - Management makes estimates for revenue recognition, allowance for credit losses, stock-based compensation, income tax provisions, inventory reserves, and impairment of assets[20] - The allowance for credit losses on accounts receivable remained at $5,000 as of March 31, 2025, with no credit losses recorded in Q1 2025, compared to $13,634 in Q1 2024[21] - Inventories are valued at the lower of cost or net realizable value using the weighted average method, with reserves totaling $4,454 as of March 31, 2025, and December 31, 2024[22] - The company's Level 3 financial instruments include warrant liabilities, valued using model-based techniques with unobservable inputs[27] - Basic and diluted loss per share was $(0.33) for Q1 2025, compared to $(0.32) for Q1 2024, with common stock equivalents excluded due to anti-dilutive effect[30] - Stock-based compensation expense for RSUs was $105,811 in Q1 2025, down from $227,000 in Q1 2024, with unrecognized expense for unvested awards totaling $1,654,312 as of March 31, 2025[87] - Revenue is recognized when customers obtain control of promised goods, typically at the point of receipt, with estimated returns of $6,587 as of March 31, 2025[35][39][41] - Management has identified substantial doubt about the Company's ability to continue as a going concern due to accumulated losses and negative cash flows, with future profitability dependent on securing widespread insurance coverage and additional funding[46][50] 3. Related Party Transactions Related party transactions include demand notes receivable from shareholders, a royalty-free license, IB-STIM sales to a board member, and accounting services from a former CFO's firm | Related Party Transaction | March 31, 2025 | December 31, 2024 | | :------------------------ | :------------- | :---------------- | | Shareholder Notes Receivable (Net) | $0 | $0 | | License Costs | $1,317 | $0 | | IB-STIM Sales to Director | $1,957 | $0 | | Accounting/Tax Services | $21,871